Scorned House Appropriations Committee soldiers on

Administration officials would argue that once legislative savings are factored in, the program level funding for the president’s priorities will be higher than these numbers suggest. And in the wake of the August debt accords, which are driving the top line now, the White House says it did some pruning of its own to make the choices more manageable.

But the relentless downward pressure helps explain White House Budget Director Jack Lew’s frustration when House Republicans attempt to add policy riders to the same spending bills. It also shows the narrow line that Senate Democrats must tread if they are to get to the 60 votes needed for passage.

Text Size

-

+

reset

Boehner frets about getting a bill that a majority of his House Republicans can support. But Senate Majority Leader Harry Reid (D-Nev.) has to get virtually all of his 53 Democrats and allied independents since bitter experience has taught him he can’t really count on more than seven or eight Republicans – typically members of the Senate Appropriations Committee – to come through in the end.

“It’s a difficult course no doubt on both sides of the Capitol,” Rogers told POLITICO. “We have no choice. We have to pass these bills. We’re making good progress. Everyone is operating in good faith. We’re playing it low key, serious conversations.”

Prior to Thanksgiving, Congress made a first downpayment, approving a $182 billion “minibus” package of three bills covering five Cabinet departments and major science agencies. It was an old-fashioned compromise, and when rejected by more than 40 percent of House Republicans, this set off an angry meeting of top Republicans on House Appropriations, upset with what they saw as a lack of leadership support.

“We had a good conversation,” Rogers said, refusing to go further.

The task now is many magnitudes larger: nine annual bills swept into a single package together with emergency war funding and disaster aid. Rogers hopes to bring it to the House floor Dec. 15, just a day before the current stopgap continuing resolution runs out. “It will be a nine-pack instead of a three-pack,” he said. “It’s the rest-of-the-bus.”

Rogers is outwardly dismissive of Lew, even as the director is determined to be a behind-the-scenes force in the talks now. “He’s not a member of Congress,” the chairman says. But Rogers has seemed to give himself more room to meet demands for additional disaster aid allowed under the August deal.

In this case his marker for 2011 is $1.211 trillion, a number which counts all emergency spending and war funding together with the $1.050 trillion appropriations cap set after the government shutdown fight in April.

Even allowing for the full $11.3 billion in disaster aid permitted under the August debt accords, the 2012 total will be $1.181 trillion Rogers estimates—a $30 billion reduction compared to 2011 and $94 billion below 2010 by his reckoning.

Rogers has yet to commit to having the full $11.3 billion for disasters in this package but has moved past earlier comments where he was drew a tighter line that would have been permitted far less.

The tax cuts will be expiring and the deficit reductions will be pending and PAYGO will require that the tax cuts be extended with a budget deficit override of 60 votes in the Senate and an Obama signature, which if Newt has been elected should not be forthcoming so Newt gets to be on the receiving of gridlock.

Bet Newt will demand the repeal of PAYGO but passage of a balanced budget amendment because deficits don't matter, only symbolic actions that are cynically contrary to the conservative dogma.

Scandal: The Justice Department has formally withdrawn a letter to Congress denying it sanctioned or allowed guns to be transferred to Mexico because it contained "inaccuracies." That's one way of putting it.

HOLDER LIES!

Back in February, Assistant Attorney General Ron Welch, in response to the investigations by Rep. Darrell Issa and Sen. Chuck Grassley of the Fast and Furious gun "walking" program run out of ATF's Phoenix office, wrote a letter stating that the "allegation that ATF 'sanctioned' or otherwise knowingly allowed the sale of assault weapons is false."

The Bureau of Alcohol, Tobacco, Firearms and Explosives, Welch contended, "makes every effort to interdict weapons that have been purchased illegally and prevent their transportation to Mexico." Another Friday document dump has confirmed what agent testimony and other information have already shown — this letter, and almost everything in it, was a complete fabrication.

For all you who believe in Reaganomics, you might want to hear what one of President Reagan`s economic advisors has to say about tax cuts....

December 6, 2011, 6:00 AM Raising Taxes on the Rich: Not Whether, but How By BRUCE BARTLETT

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the forthcoming book “The Benefit and the Burden.”

Last week, the Senate rejected proposals by both Democrats and Republicans to pay for an extension of the 2 percent temporary payroll tax cut enacted a year ago. The Democratic plan to finance it with a 3.25 percent surtax on millionaires garnered significantly more votes than the Republican plan to cut the number of federal jobs and freeze the pay of federal workers.

TODAY’S ECONOMIST Perspectives from expert contributors. This time last year Republicans were insisting that the Bush tax cuts be made permanent without paying for a penny of the cost, even though there is no evidence that they stimulated the economy.

Saying that they are now concerned about the impact of the payroll tax cut on the deficit and its lack of stimulative effect makes Republicans sound a lot like Captain Renault in “Casablanca,” when he said he was shocked to discover gambling going on as he was handed his winnings.

Republicans like to pretend that cutting spending is economically costless, even stimulative, whereas raising taxes in any way whatsoever is so economically debilitating that it dare not be contemplated. This view is complete nonsense.

Careful studies by the Congressional Budget Office and others show that certain spending programs are highly stimulative, whereas tax cuts provide very little bang for the buck.

Congressional Budget Office Keep in mind that these results are symmetrical. A policy with a high multiplier, such as government purchases, will reduce the gross domestic product by exactly the same amount if it involves spending cuts. A tax cut with a low multiplier will have an equally small negative economic effect if it is instead done as a tax increase.

This would suggest that one of the worst ways to cut spending, from a macroeconomic point of view, would be to do it the way Republicans proposed last week: by cutting government employment. Judging by the table above, cutting taxes for lower- and middle-income people and paying for it with higher taxes for higher-income people, as Democrats have proposed, is unambiguously stimulative.

In any case, the Republican position is politically weak. Polls consistently show that a large majority of Americans favor higher taxes on the rich. For example, the New York Times/CBS News polls in September and October found that about two-thirds of Americans would raise taxes on households earning $1 million or more to reduce the deficit; only 30 percent were opposed.

Growing numbers of millionaires and billionaires have gone on record as favoring higher taxes on the rich, because they can afford them and think they’re necessary to deal with our nation’s fiscal problem, which is largely due to historically low revenues.

These include Warren Buffett, Carlos Slim, Mark Cuban and Nick Hanauer, among others. The group Patriotic Millionaires for Fiscal Strength has been lobbying Congress to raise taxes on people like themselves. A similar movement is under way in Europe as well.

It is no longer possible to deny that there has been a sharp rise in the income and wealth of the ultra-rich while everyone else’s income has stagnated. Authoritative recent studies by the Congressional Budget Office and by Anthony Atkinson, Thomas Piketty and Emmanuel Saez prove that fact beyond question.

The point is not to punish the rich for being rich — Republicans routinely scream “class warfare” whenever anyone suggests higher taxes on the rich — but to raise revenue. If the rich don’t pay more, everyone else will have to.

Recognizing the intellectual and political weakness of their position, Republicans have responded that there is nothing to stop rich people from sending checks to the Treasury Department to reduce the debt. About $3 million is annually donated to the government for this purpose. On Oct. 12, Senator John Thune, Republican of South Dakota, introduced legislation that would add a line on tax returns to make voluntary contributions to the Treasury. It was enthusiastically endorsed by the anti-tax activist Grover Norquist.

Reducing the deficit through voluntary contributions is not a serious idea. It would be a drop in the bucket, such contributions are not sustainable, and it would be unwise to have the government dependent on them because inevitably they would come with strings attached.

Republicans often say that tax evasion and avoidance by the wealthy would cause revenues to fall, rather than rise, if their taxes are raised. But according to the Tax Policy Center, rates higher than the current top rate of 35 percent accounted for 29 percent of individual income tax revenue as recently as 1986, during the Reagan administration.

Recent studies by Peter Diamond and Emmanuel Saez and by A.B. Atkinson and Andrew Leigh find that increasing the top income tax rate would raise net additional revenue at least until it reached 63 percent and probably much higher.

Nor is it correct that low taxes on the rich are essential for economic growth. Recent studies by Dan Andrews, Christopher Jencks and Andrew Leigh and by Thomas Piketty, Emmanuel Saez and Stefanie Stantcheva show that while tax cuts for the rich have raised their share of aggregate income, they have not raised the rate of economic growth.

There are legitimate questions about whether the temporary payroll tax cut stimulated employment or if its expiration will reduce growth, about whether a surtax on millionaires is the best way to pay for it and how much additional revenue can reasonably be expected.

But the idea that the rich cannot or should not pay more should be dismissed out of hand. They can and must pay more; the only question is how best to do it.